With the ongoing US-China Trade War, Brexit, and Hong Kong Protests happening, many investors are worried that these events may trigger a global recession.
On the flip side, the falling stock market may mean good investment opportunities for value investors, who believe in the principle of “Buy Low, Sell High”.
So how should you manage your financial assets and investments?
ASSESS YOUR SITUATION & SET YOUR GOALS
The first step to take is to discuss with your Financial Adviser to identify your investment needs and goals.
Having goals helps you stay committed and focused. Knowing where you are now is really important.
Ask yourself these questions before you invest:
- Have you set up an emergency fund?
- Are you adequately insured?
- Are you currently working?
- What is your income level?
- How much do you save every month?
- Do you have huge financial commitments? (eg. housing loan, car loan)
Answering these questions will ensure you start with a good foundation.
ASSESS YOUR RISK APPETITE
There are 3 key factors that will affect your risk appetite
Your ability to take risk: This depends on the stability of your income and time horizon of your goal. The more stable your income, the greater the risk you can potentially take. Similarly, the longer your time frame, the greater your ability to wait out a bear market should it happen.
Your willingness to take risk: Ask yourself… How well can you sleep during a market correction? How much knowledgeable are you about investment? Did you ever have good or bad investment experiences in the past? These issues will shape your attitude towards risk, and therefore affect your willingness to take risk.
The need to take risk: This depends on your financial goals. How determined do you want to reach your goals. What rate of return is required? If you are unwilling to take the necessary risk, you will have to lower your expectations.
Assessing your risk appetite will help you understand how much risk you can or may choose to take. An experienced Financial Advisor can help you figure this out, and at the same time help improve your understanding of how investment works.
GETTING TO YOUR GOAL
No plan will succeed unless you take action. Your Financial Advisor can help you design a plan based on your goals, time horizon, and risk tolerance. In addition, he or she can also help track, and review your investment performance over the years. Contact your trusted FLA Organization Financial Advisor to get started today.
